Intel Notes Chipset Issue, Revises Outlook

SANTA CLARA, Calif. ( TheStreet) -- Chip giant Intel ( INTC) has revised its outlook to reflect a chipset design issue and the completion of its $1.4 billion Infineon acquisition.

The move pushed the company's shares down 23 cents, or 1.03%, to $21.24 in late morning trading Monday. Shares of rival AMD ( AMD) were climbing on the news, up 43 cents, or 5.74%, to $7.92.

Intel has discovered a design issue in its recently-released Cougar Point support chip, which works with its new Sandy Bridge processor. In a statement, Intel said that it has implemented a silicon fix to the problem, and has stopped shipping the impacted chipset.
Intel has revised its first-quarter outlook.

The tech bellwether, which recently posted stellar fourth-quarter results, expects that the issue will reduce its first-quarter revenue by around $300 million, although full-year revenue is not expected to be materially affected.

Despite its chipset problem, Intel nonetheless raised its outlook, thanks partly to the recent completion of its Infineon deal. The company also said that it expects to complete its $7.7 billion McAfee ( MFE) purchase by the end of the first quarter.

Intel now expects first-quarter sales between $11.3 billion and $12.1 billion, compared to its previous forecast of $11.1 billion to $11.9 billion. The company now expects a gross margin of 63%, plus or minus "a few percentage points", down from its previous guidance of 65%, plus or minus a few percentage points.

For the full year, Intel is looking for a revenue growth percentage in the mid to high-teens, up from its previous forecast of approximately 10% growth.

--Written by James Rogers in New York.

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